The cost of health plans sold directly to individuals and families in Wisconsin on average will be lower next year, but fundamental problems remain with the market.(Photo11: James Blinn/Dreamstime, TNS)

The cost of health plans sold directly to individuals and families in Wisconsin on average will be lower next year. And with the sixth open-enrollment period set to end Dec. 15, the market is showing some signs of stability.

That is encouraging after years of turmoil. Yet fundamental problems remain, and with the market facing a series of changes next year, the stability could be short-lived.

The most serious problem also remains: Health insurance has become unaffordable for most people, many of them sole-proprietors or self-employed, who aren’t eligible for federal subsidies or aren't enrolled in health plans sold before 2014.

The health plans sold on the marketplaces set up through the Affordable Care Act may work very well for people with low incomes, said Mark Rakowski, vice president of Children's Community Health Plan. But they are expensive for many people who receive subsidies and largely beyond the reach of those who don’t.

Take the example of a 43-year-old couple, with a 12-year-old son and 8-year-old daughter, who have an income of $125,000 a year.

The least-expensive health plan they could buy next year in Milwaukee County costs $14,821.44 a year and has a $15,800 deductible.

In other words, the family would have to spend a total of $30,621 on premiums and medical bills before their coverage kicks in.

The cutoff for the subsidies, which are tied to income, was $48,560 for an individual and $100,400 for a family of four this year.

Some perspective is needed here. Health insurance also is costly for people who get health benefits through an employer.

Nationally, family coverage cost employers and employees an average of $19,616 this year, and that doesn’t include deductibles and other out-of-pocket expenses, according to an annual survey done by the Kaiser Family Foundation.

Deductibles typically are much lower, though, for health insurance through an employer.

Estimating how many people buy health insurance on their own and aren’t eligible for subsidies is difficult.

But roughly 36,000 people in the state who selected health plans on the federal marketplaces for this year were not eligible for federal subsidies, according to federal figures. And that doesn’t include people who buy health plans off the marketplaces.

(About 30,000 people in Wisconsin are enrolled in health plans that were sold before 2014, when the Affordable Care Act went fully into effect. Those plans, which are closed to new customers, have lower costs largely because they were not required to cover people with pre-existing health conditions.)

National figures make clear that people who don’t receive subsidies are being driven from the so-called individual market.

In 2017, an estimated 6.9 million people not eligible for subsidies were covered by health plans in the individual market, according to an analysis by the Kaiser Family Foundation.

That number now is sharply lower, down 2.5 million in the first quarter of this year.

Three changes could worsen problem

Most people get health insurance through an employer — about 152 million — or through government health programs. And most people who buy health insurance on their own get subsidies — 9.2 million people in the first quarter of this year.

The subsidies cap the amount they must pay for health insurance to a percent of their incomes, largely shielding them from the price increases.

The remaining part of the market is made up of people who don't get subsidies — middle-class people — and who increasingly can't afford health insurance.

Three changes in the market next year are expected to worsen the problem:

Eliminating the penalty for not having health insurance. The penalty — a minimum of $695 for each uninsured adult and $347.50 for each uninsured child — was considered too low to be effective. That said, fewer healthy people, particularly those who are younger, are expected to buy health plans on the marketplaces next year.

Implementing new rules that will allow associations to sell health plans that don’t comply with some of the requirements, such as limits on how much more older people can be charged than younger people, imposed by the Affordable Care Act. The association health plans could be less expensive for some people — though how much less remains unclear.

Allowing short-term plans to be sold for a full year and then renewed for up to three years. The plans don’t have to cover people with pre-existing health conditions or provide minimum benefits, such as covering prescription drugs. That will significantly lower the cost.

Short-term plans may help, or hurt

Some short-term plans could be an option for people now priced out of the market, provided they are healthy. But people will need to read the fine print. For example, one of the most common exclusions is for injuries to children in school sports programs.

J.P. Wieske, the state’s deputy commissioner of insurance, doesn’t expect a huge increase in enrollment in short-term plans next year.

Still, the changes, particularly short-term plans, could exacerbate the primary reason for the sharp increase in the cost of health plans sold on the marketplaces: The plans have drawn more people with high medical bills and fewer healthy people than projected.

“You are pulling out healthy bodies,” said Cathy Mahaffey, the chief executive of Common Ground Healthcare Cooperative. “Whenever you pull out healthy people, it has an impact.”

The short-term plans even could appeal to some people who receive subsidies. That’s because the subsidies drop sharply for people closer to the subsidy cutoff.

In Milwaukee County, the least-expensive plan for someone who is 28 years old and has an income of $35,000 next year costs $1,382.40 a year and has a $7,900 deductible — and that’s with a subsidy.

“There is no value to a 26- or 27-year-old kid buying a health plan with a $7,000 deductible,” said Todd Catlin, of Transition Health Benefits in Brookfield.

The worst-case scenario is that people who are healthy will buy short-term policies while people with pre-existing health conditions, ranging from high blood pressure to cancer, will have to buy health plans on the marketplace.

At that point, there essentially would be two markets for those buying insurance on their own.

'The key to this is the subsidies'

That said, for all its problems, the Affordable Care Act has expanded coverage.

More than 250,000 people in Wisconsin have gotten health insurance. That figure includes people who gained coverage through the state’s expanding eligibility for its Medicaid program, an expansion made possible because of the law.

And nationally, the uninsured rate fell to 8.8 percent, or 28.5 million people, in the first six months of this year compared with 16 percent, or 48.6 million people, in 2010, Katie Keith, a principal at Keith Policy Solutions and an expert on the law, noted in a recent blog post for the policy journal Health Affairs.

Some of that drop came from the stronger economy. And the number of people who have gained coverage is lower than initially projected. But for the first time, people in low-wage jobs, which generally don’t provide health benefits, have had access to health insurance.

"There is a need for health insurance. People appreciate that they have coverage,” said Mahaffey, of Common Ground Healthcare Cooperative. “The key to this is the subsidies, because that is the only way people can afford it.”